At the FOMC meeting that ended Wednesday and started the equity market tumble, two members of the committee voted against the Fed's decision to leave rates and asset purchases as they were. Kansas City Fed President Elizabeth George and St. Louis Fed President James Bullard were the "no" votes. This morning, Bullard released a statement explaining his vote.
In general, Bullard continues to see inflation as the most important issue that the Fed has to deal with. Writing of himself in the third person, he says:
In his view, the Committee should have more strongly signaled its willingness to defend its inflation target of 2 percent in light of recent low inflation readings. Inflation in the U.S. has surprised on the downside during 2013. Measured as the percent change from one year earlier, the personal consumption expenditures (PCE) headline inflation rate is running below 1 percent, and the PCE core inflation rate is close to 1 percent. President Bullard believes that to maintain credibility, the Committee must defend its inflation target when inflation is below target as well as when it is above target.
Bullard does not explain exactly how to defend against an enemy that is running away.
Two other issues also troubled Bullard. First, he did not agree that Fed Chairman Bernanke should have discussed the "taper" at this time. Second, Bullard believes that such a discussion is a retreat from state-contingent monetary policy, which he says is "best central-bank practice."
The full text of Bullard's statement is at the St. Louis Fed website.
Filed under: Economy